Canadian Luxury Goods Market Set to Expand by Jeff Dagg

Oct 15

Canadian Luxury Goods Market Set to Expand by Jeff Dagg

The Canadian luxury good market has begun to stir over recent news that some of the most popular American luxury chains are planning to enter Canada. With the expectation of 6 Nordstrom stores and potential 7 Saks Fifth Avenue popping up all over the county the word ‘luxury’ may eventually take on new meaning.

The results of these developments boil down to a really exciting opportunity for the Canadian luxury shopper. Adding American luxury stores to the already standing chains such as Harry Rosen and Holt Renfrew can only end up in the favour of the consumers. As everyone knows, more competition brings lower prices. The flip side of this is an interesting battle between the existing Canadian retails and the attempt of the American ones to take over the market.

Richard Baker is one of the main masterminds behind the entire movement. His recent purchase of Saks Fifth Avenue was brought about by the idea of having Canadians spend their money in Canada. It is widely noted that many Canadians would venture south to America to do their luxury shopping and by bringing the luxury shopping north it would not only allow the existing luxury shoppers to buy closer to home, but to also expand the luxury good market by introducing new consumers to the products.

When Sonya Gulati, senior economist at TD, was asked what she believed would be the result of the American luxury stores entering the Canadian market was her answer was rather ambiguous. She believes that in all likelihood the luxury market will expand in the larger areas like Toronto and Vancouver. She attributed this to the larger amount of high-income earners in these area, which brings us to the question of who is going to get that bigger slice of the pie.

With the impending threat of the American chains entering Canada Holt Renfrew and Harry Rosen have taken steps to compete. Holt Renfrew has closed stores in Ottawa and Quebec City in preparation to expand in other places to maintain in position in the market. They believe that they have strong brand awareness and a loyal customer base, which they hope will result in continued success in the luxury retail market. This could prove to be one of the most important parts of the whole evolution. If there are people who have always shopped in Canada and supporting domestic businesses is important to them the existing stores should withstand the attack. Though if there are more people who are looking to maintain a certain image that only stores like Nordstrom and Saks can offer there may be a drastic change in the market as a whole.

It would be unfortunate to see it happen, and it probably won’t, but there may be a time when stores like Harry Rosen and Holt Renfrew are seen as inferior stores. This may seem like a loss considering how hard they have worked to attain their current position, but it can also present a rewarding opportunity. For example, what if they were to accept their position and start carrying different brands. Not necessarily lower class goods, but high quality reasonably priced goods. They may give up their position on the list of super luxury goods retailers but by offering new products at affordable prices they open themselves up to a drastically larger portion of the population. A change in this fashion could prove much more lucrative than only capturing a small fraction of the market.

Overall, the consensus is that Nordstrom and Saks have made the right decision to enter the Canadian market and they are both expected to thrive thrive. Experts also believe that Holt Renfew and Harry Rosen have made the right decision to try and compete with the new entrants but there is the potential for them to realize they may not have what it takes to compete in the long run. It is really an interesting situation and should be exciting to see how it plays out in the coming months and years. The bottom line is that it is a great time to be a luxury goods lover in Canada.